I would tuck there roots into the soil all the way, but it could be different with your medium. When you go to "transplant" bury them most of the way up that stem, they will grow more roots from it, and will make the plant more stable. They do look like they need more light to me, as well. I go pretty close with CFLs when I use them, like a couple inches, but I may have a different wattage then yours, careful not to give them heat stress. What is the temp right above your leaves? Could possibly get a fan blowing across the bulbs (but not the seedling though).